Student Loans

Due to lack of financial aid some students can't manage the desired education. Student loans as part of a government initiative helps these students by means of financial aid. The money they earn or receive from parents is sometimes not sufficient for the course they want to pursue and in such cases, student loans remains to be the most viable resort to check out. And with financial groups aiding you to find the most suitable and affordable student plan to meet your living costs while studying, keep the agonizing nights at a bay.

The local award authority handles the first stage of your loan application. You will be first assessed through an eligibility test. Once you clear it you can study in any part of the country, as the Student Loans Company (SLC) takes responsibility for the administration of your account. The interest rate for the loan is based on inflation and is calculated daily from the day your loan starts, and the interest is added to your account on a monthly basis. Once your course is finished, the company on its specific guidelines will ask you to repay the loan. 

Student Loans Help To Fill The Gap 

If you are planning a student loan to complete your college, then you are in a good position. I have seen undergraduates complete school owing about $16,500 and paying roughly $195 a month for the next 10 years. Student loans are easy to use because they're settled at below-market interest rates, requires no guarantee, and repayment typically doesn't begin until after graduation. The largest provider of this financial aid is the federal government; otherwise the loan may come directly from college, state government or private financial institutions. If a student is claimed as a dependent by a taxpayer during a taxable year, he or she can't claim the deduction. And if a taxpayer is married at the close of the taxable year, the couple must file jointly to take the deduction. What Do You Have To Do To Apply For A Student Loan 

Let me now explain to you in brief the various steps you need to follow for applying for a student loan. You have to choose the type of loan you want after filling a free application form for financial aid. There are two types of loan you can choose from:

Perkins: With a Perkins loan, you can borrow $4,000 per year just by signing a Promissory Note. 

Stafford: A Stafford loan allows you to borrow $2,625, the first year, $3,500 the second year and $5,500 in the third and fourth years. The funds usually come from banks or other lending agencies. 

Other then the above mentioned two types; there are some more variations on these student loans. If you don't qualify through the Financial Aid Application form, you can even get Stafford loan, for which you will have to pay interest from the time you receive the money. If you want, you can accumulate this interest until the end of the repayment term. 

Make Your Student Loan A Friend, Not An Enemy

Over a period of time, student loans have really become a friend of students in distress by enabling you to pursue your dream career. But some people take undue advantage of this financial aid, which is not fair. They even create trouble during repayment. You must repay the loan on given guidelines. In case of problem you can always contact your financial aid office, which is there to advice and help you on budgeting. But the whole cost of education can go to trash and you will be on debt if you do not work hard. Many students under 25, who have graduated recently have filed for almost 100,000 bankruptcies. If such a thing occurs, there are many programs designed to help the struggling student with debt.

Conclusion 

Financial aid provided by the student loans are a gift in disguise. These loans should be regarded as any other loan you use in your lifetime.

Your Borrowing Responsibilities to Evade Defaulting on Student Loans

Failure to pay off your loan or mortgage could mean damaging your credit rating, lenders' and brokers' lack of interest in your loan application. And if yours is a student loan then it could cost a cut on your wages, difficulty in getting tax deduction, etc. Out of a number of loan and mortgage instruments available in the market, student loans have become an undeniable fact of life for a growing number of American students. Here, we will enlighten you with some valuable information to make the best choice for you in regards to getting a student loan.

Of various loan programs, the largest are the Subsidized Federal Stafford Loans and the Unsubsidized Federal Stafford Loans. For both subsidized and unsubsidized loans, students need not make any payments on the principle or the interest pending six months after you graduate, leave school, or drop to less than half-time. Assuming you received a maximum loan every year and you attend school for four years, if you don't start repayment until six months after you graduate, the Government has paid as much as $5,200 to the bank to cover your interest charges. With a subsidized loan, you could save up to $5,200 (e.g. the total interest charge). 

In case of default on payment of your federal student loan, the holder of the loan will ask the guaranty agency to purchase the loan after 270 days (roughly nine months). In turn, the guaranty agency will procure the loan and begin collecting the loan. On a defaulted student loan, repayment is accelerated; meaning immediately your entire balance (principal and interest) is due in full. 

In general, if you fall short to repay the loan amount during stipulated timeframe, it is capitalized (added to the principal balance of the loan(s)) when the forbearance ends. So you must use the forbearance period to develop a budget which could help you in repaying your student loan payments. If you start remitting monthly interest payments during the forbearance period, you can avoid your interest being capitalized (added to your principal). You should use forbearance as a last solution to avoid default. 

Being in default could lead to delay in class registration, and holds on transcript requests and receipt of diplomas. These are the short-term effects of defaulting. However, the list of long-term effects is even larger and bigger. Your loan default will be reported to national credit bureaus, which can spoil your credit rating for a minimum of seven years. Poor credit will prevent you from further financial aid. 

Loan default affects your financial future and overall credit reputation. You will be barred for further financial aid. Your state and/or government income tax refunds may be seized to repay your loan(s). 

In case of your inability to pay off your loan, contact your lender/provider and make suitable arrangements to rectify the delinquent loan. Your lender/provider evaluates your situation and helps you find the best option for repayment. Possibly, you could qualify for deferment or forbearance of the loan. Additionally, if you make 12 regular payments, you can qualify for rehabilitation, which will pull you out from default category. 

A student loan can help you realize your dreams, but its default can be a nightmarish experience. Deal with it immediately to avoid penalties on default.

Dispursed Student Loans

The publishing of a budget will invariably involve major public policy debates on taxes and spending. In last week's budget, a minor storm for a smaller audience of those studying, regulating and disbursing student loans resulted. The Office of Management and Budget came up with a definite answer to a long-standing debate on government-guaranteed student loans through subsidized private lending institutions in cost as against direct loans from the education department. The budget calculators are clear that the government-guaranteed loans are over 10 times more costly. For every $100 on student loans the US government pays subsidy of $12.09 on government-guaranteed loans and only $0.84 for direct loans.

However the figures are in dispute with the student loans industry. A new group, Partnership to Protect Affordable Student Loans circulated a letter last week on Capitol Hill alleging that despite the budget figures; over $1.4 billion is the cost to taxpayers of the direct loan program as against guaranteed loans. But the group run by Mercury Public Affairs, which handles public relations for Sallie Mae, the largest student lending institution, bases these figures on comparisons with dissimilar numbers. 

Sallie Mae student loans put more complex arguments forth on relative costs of the two programs. But analysts cannot definitively disprove assessments of OMB or Congressional Budget Office, which has a similar conclusion. The complexity of the numbers has led many in Congress to believe in hidden costs in the direct loan program. Consequently the House and Senate budget and education committees have requested a reexamination of costs by the Government Accountability Office.

As long as the results are taken seriously it doesn't really matter. If critics of subsidized lending are correct billions of dollars at stake can easily be diverted. Currently universities have a choice of the types of loans but no incentive for direct loans. In contrast financial institutions strongly urge universities for their services, with the result that only 25% of universities choose direct loans. Even a slight shift of the number to 40% would ensure $12 billion in savings over 10 years as per the CBO. This provides over $1,000 each in Pell Grants to low-income students in the form of student loans. Compare this with the announcement by President Bush of $1000 annual increase in Pell Grants. Education committee Democrats and some Republicans including George Miller and Thomas E. Petri in the House and Thomas E Petri in the House and Edward M Kennedy in the Senate favor the proposed legislation to give universities incentives to switch programs in permitting the use of savings to increase students' Pell Grants. 

This solution though not the only one, is worth serious consideration. Arguments on student loans have increasingly been complicated by phony dichotomy between the so-called free market government-guaranteed loans and the big government direct loan program. The government-guaranteed loans are actually corporate welfare. The time is right for changing rules to ensure that more of the student loans' money reaches students instead of banks.

Occasionally consolidation of student loans makes repayment easier even with a slight increase in the interest rate. Those facing difficulty in making payments for student loans need to consider alternatives in repayment terms for federal loans. An example is the income contingent payments adjusted for lower monthly income. Graduated repayment for borrowed student loans involves lower payment for the two years after graduation. With extended repayment the loan term is extended without consolidation. But the increase in the total interest amount in each option is less than that of consolidation.

This may not be the only solution to the problem, but it is worth taking seriously. For too long, the arguments about Student loans have been clouded by a phony dichotomy between the supposedly free market government-guaranteed loans and the big government direct loan program. In fact, the government-guaranteed loans are a form of corporate welfare. Maybe it's time to change the rules and make sure that more of the student loan money goes to students, not banks.

Student Loans Help To Fill The Educational Gap

Student loans are actually a good deal. Interest rates are below market, there's no collateral and repayment usually begins only after graduation. For 2001, federal tax law permits deduction up to $2,500 in student loans interest payments.

Joint filers with adjusted gross income of $60,000-$75,000 or less and single of $40,000-$55,000 or less can avail this deduction. The deduction on interest is restricted to the first 60 months consecutive. As long as it is student loans, it doesn't matter whether it's the student, parent or spouse. The person responsible for the student loans gets the deduction. A dependent student has no claim to the deduction if another taxpayer has claimed him as a dependent the same taxable year. For a taxpayer getting married toward the end of the taxable year, joint filing is required for the deduction.

The federal government is the largest among providers of student loans. Educaid.com and FinAid.org are worth visiting for the more typical student loans programs. Financial need will determine interest rates under Perkins student loans or delayed repayment schedule under Stafford student loans. Standards are similar to student aid.

In the Perkins student loans program, severe financial need is required for graduates and undergraduates. It is directly administered through the college, the real lender. Eligibility is identical to student aid. Free Application for federal Student Aid (FAFSA) forms are available in financial aid offices.

Perkins student loans offers maximum benefits among student loans, including 5% interest rates, no origination fees, payments after nine months following graduation, and 10-year period. Serving in Vista or Peace Corps will result in cancellation of student loans. The maximum annual amount for Perkins student loans is $4,000 for undergraduates and $ 6,000 for graduates, with $20,000 and $40,000 being lifetime maximum. However attending a college with good payback rating can increase the maximum student loans. In making a choice of a college, always ask admissions office about past payment rates. Mention your eligibility for Perkins and the institution's overall record may help in the size of your student loans.

Stafford student loans differ from the Perkins student loans as they are available to all students. More than half of all student-student loans programs are included. If the need is justified, payments can be put off till six months after leaving school without any interest during that time. For unsubsidized student loans interest applies soon after distribution of funds. Applying is similar to financial aid, with a FAFSA form filed directly with the college. The online Federal Student Aid Information Center is run by the government. On unsubsidized Stafford payments can start six months after school but interest accumulates throughout schooling. Stafford rates vary with adjustment every July, capping at 8.25%. Apart from interest, an origination fee of 4% of the total student loans amortizes over the life of student loans.

Limits are $2,625 on student loans for the first year of undergraduate school and increases to $8,500 for graduate and professional school. A lifetime cap of $23,000 for undergrads rises to $65,500 inclusive of postgraduate education.

Before getting Stafford student loans participation in a student loans counseling session is required to understand the need for debt management. A BankAmerica-sponsored website offers online sessions with the results directly sent to participating schools. If your school is excluded as a participant, the site can be used for practice. After getting the student loans, the US Department of Education makes payments to you through school, usually in two installments a year.

Private Stafford student loans are an option from banks, credit unions and private lenders if your school is not included in the Federal Direct student loans program. However options for repaying may not be many. But timely bill payments may lead the student loans consolidation group, Sallie Mae to buy your student loans from the private lender. Having bought your student loans with timely payments for the first four years a lowering of interest rate by 2 percentage points on the remaining student loans balance is possible. Authorizing automatic deductions from your bank account can save an extra 0.25%.

Two years of timely payments can earn forgiveness from Sallie Mae for the origination fees of over $250. This saves you $386 on a $5,000 student loans and up to $7,095 on $60,000 student loans.

Almost every state has state-guaranteed student loans with interest rates around 8% for undergraduates and $5,000 for graduates. Apply to banks administering state programs. The individual college financial aid officer has the final say.

Student Loans Consolidation

Consolidation student loans cover FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health professional student loans, NSL, HEAL, Guaranteed student loans and direct student loans. Consolidation of student loans are offered for private student loans also.

How It Works 

The advantage is often in lowering monthly payment by extension of the term beyond the standard 10-year repayment plan for federal student loans. Reduction makes it easier to repay. The downside to extending term is the increase in total interest amount.

Sometimes it is possible to decrease monthly payment without extending the term beyond ten years, as when repayment of the student loans is less than 10 years due to minimum payment requirements. Essentially the shorter student loans term is extended to 10 years. Unless the same monthly payment is continued the total interest amount will increase.

The interest rate of consolidation student loans is the weighted average of the interest rates on the student loans being consolidated, averaged to the nearest 1/8 of a percent at a maximum of 8.25%.

Consolidating student loans before starting repayment is done with the lower in-school interest rate. So while rounding up the weighted average may cost up to 0.13%, consolidating before starting repayment saves up to a substantial 0.6% net savings. The in-school interest rate is 1.7% with the 91-day Treasury Bill rate from the last May auction. During repayment, the interest rate is the 91-day T Bill rate plus 2.3%. Federal Register and the US Department of Education have confirmed the loophole. 

Among the main benefits of consolidation student loans are:

--A single payment to replace multiple payments of student loans.

--Accessibility to alternatives including extended repayment, graduated repayment and income contingent repayment. The extended repayment plan term is based on the balance which is higher on consolidation student loans. 

--Locking in the interest rate including for the lower in-school interest rate during the grace period. 

There are disadvantages as well: 

--Consolidating during the grace payment requires immediate repayments and loss of the remaining grace period, including benefits of subsidized student loans.

--Loss of certain student loans forgiveness provisions on the Perkins student loans.

--Extension of repayment term can increase the total interest in the lifetime of the student loans.

As per the current law consolidation student loans can only be done once. When interest rates fall, having already consolidated makes you ineligible to benefit from the situation. Lenders offering benefits for electronic funds transfer and timely payments are likely to offer less attractive benefits for consolidation student loans.

Married couples have the option of joint consolidation of student loans. A longer repayment term and lower monthly payments are beneficial but problems arise in the event of a divorce. Joint consolidation of student loans makes each of the spouses take full responsibility for repayment. Splitting up the debt during divorce proceedings is not possible so both are held responsible. If one spouse fails to pay, the other one is responsible. Student loans are also not eligible for in-school deferment any longer. Only in the event of death or permanent disability will the debt be dismissed. 

Graduate students may consolidate student loans when applying for house mortgage. No savings on fixed rate student loans will result from consolidation of fixed rate student loans. Not that there is any reduction in the underlying rate in consolidating but a slight increase is possible owing to the rounding up to the nearest 1/8th of a point. Instead if the weighted average of interest rates on other student loans would result in the interest rate being rounded up nearly 1/8th of a point, inclusion of fixed rate student loans may distort some of the roundup and result in indirect savings. Similarly with the weighted average just below the 1/8th of a point boundary, inclusion of fixed rate student loans taking it over the 1/8th of a point boundary to increase the interest rate by up to 1/8th of a point beyond.

More information about student loans consolidation can be provided by your lender. FinAid lists education lenders offering federal and private student loans including consolidation student loans.

Federal Or Private Student Loans

It isn't very easy to decide between federal student loans and private student loans. Even with all the grants and scholarships, money may still be required for your education. Loans are the option but decide whether it is federal student loans or private student loans that's better.

For a loan to pay for education, always consider federal student loans first. Federal student loans are the largest source for education loans with long terms and low interest rates to suit students. They offer many benefits in comparison to other options that include:

- Lower interest rates

- Option of postponing payments

- Longer repayment terms

- Easier credit requirements

Eligibility is need-based for many of the loans including federal Perkins loan and the subsidized federal Stafford Loan. To apply for the loans a complete FAFSA is necessary.

Federal student loans student loans have a number of common characteristics:

Federal student loans Perkins loan: A low interest loan for students with exceptional financial needs the Federal student loans Perkins loans takes the FAFSA details into consideration. For undergraduates $4,000 per year and $6,000 for graduate students mark the upper limit.

Federal Stafford Loan: Available to both undergraduates and graduates, the Federal Student Stafford Loan determines the amount based on the student's year in school and their financial dependence or independence. The college financial aid office makes the decision for eligibility. These loans can be subsidized or unsubsidized depending on the student's financial need. Subsidized loans are on the basis of financial need. The government pays the interest during the student's time in school in deferment and grace period. Unsubsidized loans are available to all irrespective of income and the responsibility for all interest is with the student.

Federal Student PLUS Loan: 

Also called parent loan for undergraduate student the Federal PLUS loan is low on interest and meant for parents. Every year parents borrow the cost of attendance, minus other financial aid like scholarships, grants, student loans, etc. The PLUS loan is not about financial need and requires a credit check for qualified applicants.

The purpose of private student loans is to supplement federal student loans programs from schools, banks and education loan organizations. Used mainly when federal student loans aid falls short, these loans have varying terms depending on the lender and credit history. Certain facts need to be considered when deciding on a private student loans.

- Private student loans have credit requirements including a co-signer

- The lender based on your credit score decides interest rates and fees

- Private student loans often lack deferment options

- Private student loans programs may offer benefits like discounted interest rates and rebates.

Irrespective of which loan, think conservative and borrow wisely. All loans require repayment, including federal student loans and private student loans. Usually private student loans are unsecured requiring no collateral but possibly with a higher interest rate.

The absence of government backing on private loans, credit history determines approval. Bad or no credit history could mean higher interest rates. A co-signer is always possible. Timely repayment of loan will result in a good credit history soon. Apart from tuition and fees, private student loans can also cover living expenses, supplies, computers and other daily expenses.

Most student loans permit deferment of principal and interest payments while being enrolled in school. You can also opt to make interest payments while in school and defer payment of the principal. Interest payments may also be tax-deductible. With no deadline private student loans can be applied for at any time. According to the financial institution of your choice, preapproval can take minutes with the money reaching you directly in just a few days.

Thousands of banks, credit unions and financial institutions offer private and federal student loans. An Internet search will give you ample options to explore.

Consolidation Of Student Loans

Consolidation of student loans can be the ideal solution when one requires help to manage their debt. You may have to make several payments but by applying for a Federal Consolidation students loans, you can make just one payment in a month. Your lender combines your different loans into one single loan. Choosing to consolidate student loans requires interest payment at a fixed rate, determined by the average of your loans up to the nearest .125%. Direct loan electronic payments may further lower interest rate. Student loans debt being unlikely to be the largest debt owed by a person may be best managed in consolidated student loans.

Reasons to consolidate with the federal direct loan program:

--You pay according to your income

--More repayment options than ever before

--Freedom to change repayment play any time

--Everything in one monthly statement

--Qualifying despite being in default

--Qualifying despite still being in school

You Can Pay Less Each Month

The number of federal student loans to repay doesn't matter, for consolidating into a single account. You can consolidate one or more FFEL or direct student loans including parents with PLUS loans into a direct loan account. Consolidating student loans combines better repayment terms, convenience, financial viability and competitive interest rates. With the option of repaying over a longer time period, your monthly payments are significantly reduced even if it means paying a larger amount eventually.

Direct consolidation student loans have interest rates that vary and alter on July 1st annually. 8.25% is the maximum the interest rate for student borrowers with 9% being the upper limit for parents with PLUS loans. Those without direct loan at the moment are required to check with a Federal Family Education Loan (FFEL) program lender for details on consolidation student programs and new repayment terms more in proportion to income.

At least one loan needs to be under the direct loan or FFEL programs. To help your decision, a few considerations need to be made. 

The interest rates for each loan: A lower direct consolidation student loans rate than current loans can make it worthwhile. The variable interest rate may fluctuate but never exceeds 8.25% for students and 9% for parents with PLUS loans.

Affordability every month: If monthly payments are a problem, deferment and forbearance options exhausted and face default, consolidation can help. 

Extent of term duration: As with home mortgage and car loans, extending duration means a higher amount to repay. 

Number of payments remaining on loans: If you are in the final stages of your student loans repayment, it may not be worthwhile to consolidate or extend payments further.

Tips for student loans repayment

Student loans consolidation is commonly used to manage debts. Consolidating student loans usually saves money but though monthly payments are reduced, the interest is likely to be increased. This is why it's better to try and pay off as much of the student loans as possible at the earliest. Increasing monthly payments makes this possible. Remember certain deferment programs are also available. For example economic hardship can cause reduction in consolidate student loans. Default is taken as failed payments on student loans as per the promissory note, the binding legal document that was signed at the time of taking the loan. This violation can invite action by your school, financial institute behind the loan, loan guarantor and federal government to recover the amount.

There are a few consequences of default: 

--National credit bureaus could be notified and thus harm your credit rating for buying a car or house.

--Additional federal student aid is denied in case you return to school

--Loan payments can be deducted from paycheck

--State and federal income tax refunds may be withheld and used toward the dues.

--Late fees and collection costs are added to the due amount

--You can be sued.

Therefore loan default is highly undesirable. In case it does occur, find out the options and consider them before making a decision.

Yielding Mutual Benefits by Strategically managing Student Loans Debt

After a BA in economics in 1994, White managed to finance the degree through scholarships and work-study, running a debt of $6,000 in student loans. Working in a nonprofit housing agency in Philadelphia followed for three years after which she enrolled at Clark Atlanta in 1997, heavily depending on loans for living expenses. By the time she got her MBA her student loans debt rose to $50,000. Without a doubt costs of higher education are skyrocketing. If the last two decades are any indication, the price of two and four-year public and private colleges are exceeding inflation and family income. Last year the average tuition and fees for four-year public colleges increased almost thrice as fast as the national inflation rate.

Thus, students of all economic levels are compelled to borrow for financing education. The time is ripe for getting the better of your debt with interest rates for Federal Stafford Loans at an all-time low. The debt incurred for education should be seen as a major investment in oneself.

An example of the benefits of investing in education is Fern Williams White, 31, a 1999 graduate of Clark Atlanta University with an MBA in finance. As account associate for an Atlanta financial services firm, her salary has doubled thanks to the degree.

White got her student loans bills under control shortly after graduation by consolidating all her Federal Stafford Loans. In place of the five payments to separate lenders her monthly payment is now $391 with a saving of $150 a month.

Her consolidated Stafford Loans amount to $280 with a fixed interest rate of 7.375% over 20 years. The remainder goes into a private student loans

When Student Loans Aren't Enough: Looking beyond federal loans to finance college education

Federal student loans like Federal Stafford student loans may have helped plenty of students to go to college but very often families discover that even the maximum student loans amounts fall short of education expenses. Take for example the average cost of a four-year public school being $11,354 and for a private one, $27,516. Most first-year college students can avail of no more than $2,625 in Federal Stafford student loans.

How do families close that gap? 

The College Board reveals increasing dependence on private student loans, making it the fastest growing alternative for funds to finance college. Private student loans in the education arena are what colleges term the student loans made directly by banks and other institutions. These private or alternative student loans are distinct from federal student loans. Private student loans can either be used on their own or for supplementing federal student loans. They are essentially consumer student loans used for the purpose of education.

Like in the case of any other consumer student loans, candidates have to prove that they fulfill the credit guidelines. Students with limited if not no credit history may require a creditworthy cosigner. The main difference in education consumer student loans from other consumer student loans is the lack of collateral for securing the debt, similar to car student loans or home equity student loans. Also it is common for the repayment of the student loans to be postponed till the student finished his college education.

As for the difference between federal and private student loans, the main one is the role of the government in guaranteeing federal student loans against default. Default on repayment of federal student loans by a borrower means the government repays a part of the amount. Lenders mostly deal in the funds for both federal and private education student loans. Due to the risk being lower for a lender in federal education student loans, interest rates are typically lower for these student loans in comparison to private student loans which puts all the risk on the lender for repayment of the student loans.

It may appear that governments bend over backwards to spend as much money as it takes. However in higher education, in particular, it is no longer so. Escalating demand and costs have rendered the ideal of universal access impractical. Also studies indicate that it is the middle class that benefits most from generous education policies rather than the poor.

With the graduate being armed with an employment advantage there is every reason that he should pay at least a portion of his tuition fees. Add to it the growing pressures on government and faculty budgets and it is all the more better for students to do all they can to pay through university. The move from free or subsidized provision to student self-financing has mainly been done through study student loans, a special form of concessionary lending that makes it as easy as possible for the mostly first-time borrowers.

Families that discover that federal student loans are insufficient have a number of options. With parental approval, home, retirement or investments can be leveraged to pay for college education. They can also consider Federal PLUS student loans or Parent student loans for undergraduate students. PLUS student loans are made in the name of a parent but the difference from student loans is that repayment mostly begins as soon as the student loans are received.

Families with a preference for students to receive the student loans in their own name may have a solution in private student loans, of which several are available today. For some school authorization is required for the amount a student can borrow, but not always. Private student loans sometimes let a student postpone all payments of both principal and interest while some require interest-only payments during college. Some have fast student loans application and preapproval by phone or online. Some may send student loans funds to the school while others send directly to the borrower.

Before making a choice of a bank or lending institute for private student loans, be clear on your needs and then look for the private student loans option that is most suited to them. Education may pay in terms of higher earnings by educational advantage; it's best to borrow the least possible amount to ensure that your student loans repayment is manageable.

When Repaying is a Nightmare: Student Loans and Alternatives

There are a number of ways to consolidate school student loans. You may have three separate student loans that have all come due, totaling a substantial amount of your income that makes it unaffordable to pay student loans, rent and other living expenses. Smaller payments are possible as is managing better.

Consolidating student loans can be done through the US Department of Education under the William D Ford Federal Direct Student loans program. There's a variety of repayment plans for student loans including income contingent that fluctuates to suit your yearly income. Their number is 1-800-848-0979. 

For a stay-at-home mom who faces default if she doesn't pay her student loans immediately, you have the option of adding yours to that of your husband's school student loans. The monthly payments then decrease for the total student loans amount. You can also apply for economic hardship forbearance. Your income is reviewed once a year and monthly payments based on it.

The only other option could be to pay your school student loans with a high rate credit card. Forbearance, deferments and income contingent repayment for student loans plans are available in several options. Find out from your student loans holder what your options are. But remember that during forbearance and deferment, interest accumulates.

Sallie Mae is a good choice to consolidate federal student loans into one easy payment. Income sensitive, forbearance and other options are offered with a 15-year period to pay back. Your interest rates will be combined and averaged into a new one which though possibly higher than the current student loans can be as low as 6%. Contact Sally Mae for Smart Student Loans about qualifying at 1-800/524-9100 or www.salliemae.com. Eligible school student loans are combined into one new student loan with new terms and single monthly payment. The lower payments are due to Smart Student Loans account extending repayment of student loans term based on the amount owed, up to 30 years. Payments can be further reduced with interest-only payments for a few years. There's also a Flex Repay account.

When your student loan payments are more than you can afford, your student loans issuer can offer you options from consolidation to a step payment plan where you repay your student loans based on a percentage of your current income. While consolidation may be great, the repayment period of your student loans could take as much as 15 to 20 years according to the amount owed. Then there are temporary financial hardship forbearances when you can afford to pay nothing. The disadvantage is the accumulation of interest that continues while the student loans are in forbearance. It's best to find out from your student loans issuer whatever you options may be. But whatever it is, never default.

In a situation where you can't afford living expenses by paying student loans, ask the lender about hardship deferment to buy more time to increase income. Based on circumstances ask about forbearance too. What you need to avoid is default as it will give your children a next to zero chance of school student loans when they need them.

Most lenders dealing with borrowers are always willing to work out a method to be paid back. Not paying them will be a loss for all involved. A borrower expressing willingness to pay even a less amount or at a later time, is considered far better than the borrower who doesn't communicate at all. Therefore in case of difficulty, let them know.

Regular payments need to be made somehow or the other. Though toughest, financially it proves best in the long run. The more you pay now, the sooner you'll be free of debt. It's handy for buying you time to get other needs taken care of to be able to better afford student loans payments in the future. There may also be the option of interest-only payments to keep the interest from inflating your student loans amount. If your student loans debt is above a certain percentage of income, hardship forbearance at the very least can be filed for.

Several student loans can be consolidated into one student loan, usually with lower payments, particularly given low interest rates. But it may take a longer time to pay off. An address, phone number or even a form in your payment book or a bill to find out more details on the options offered. Also visit www.usagroup.com website for details of the options and calculators to work out the exact amount of savings possible.

Student loans consolidation or consolidation student loans is combination of different student and parent student loans into a bigger student loans from a single lender, which pays off the balances on the other student loans. Most federal student loans are covered including FFELP (Stafford, PLUS, and SLS), FISL, Perkins, Health Professional Student loans, NSL, HEAL, Guaranteed Student loans, and Direct student loans. Lenders may offer consolidation student loans for private student loans too.

With consolidation student loans the monthly payment is often lowered by means of an extension of the student loans term beyond the 10-year repayment student loans plan, a standard with federal student loans. Depending on the amount of the student loans, the extension may be from 12 to 30 years. The reduced monthly payment makes it easier to repay student loans for some borrowers. But in extending the student loans term, the total interest amount increases as well.

Graduated repayment of student loans makes payments lower for the first two years after graduation. With extended repayment of student loans, the term of the student loans is extended without consolidation. Each of the options raises the total interest amount paid but this difference is less than what consolidation offers.

The Lowdown On Student Loans

Student loans are a wonderful way to pay for graduate school. They are relatively easy to qualify for as long as you are not delinquent on any previous student loans. Usually there is no credit check, you just need to give the names of a few references which are only contacted in your lender is unable to reach you. A great option for paying for graduate school, student loans have easy qualifications except for delinquents on previous student loans. Usually no credit check occurs and only the names of a few references to be contacted in case of the lender's failure to contact you, is required.

It's surprising that half of one's student loans are subsidized. In subsidized student loans, interest is paid by the federal government and not by the borrower. Very low income is not necessary to qualify for subsidized loans as it takes income and family size into consideration with many individuals in families qualifying for one subsidized loan or the other. 

Student loans make it possible for many to attend school. Often money can be taken out to pay for other expenses other than tuition, like a new computer, books and supplies and living expenses. Graduate students sometimes quit full-time jobs or opt for part-time hours to attend school. Personal loans help cover necessary living expenses. Most personal loans however, require credit check unlike traditional student loans.

Millions of students benefit from student loans without which school would be unaffordable. But certain factors need to be remembered before signing the paperwork. Applying and getting approval for student loans will make it appear as debt on credit report, even if indicates one is not in repayment status. It can nevertheless affect credit score adversely. For example currently the money one makes may not be sufficient to pay the monthly-anticipated payment on the loan after graduation. The credit score will then reflect too much debt compared to current income. For the credit agencies the fact that one is currently in school and after graduation will be likely to earn more and have no more problems with repayment of loan, is not considered. It can affect the ability to apply for any other loan while still in school.

Sallie Mae Servicing lists out several serious implications on delinquency on student loans:

--Default can be reported to all national credit bureaus making it likely to affect financing of any future purchase like a home or automobile.

--The cost of the loan can increase with late fees and other charges.

--Entitlements may be lost for deferment or forbearance options.

--Many repayment options can be lost like income sensitive or graduated repayment.

--Eligibility for future student financial aid may be lost.

--Wages can be garnished.

--IRS refunds can be seized by the Department of Education.

--One can be sued for the balance on the loan.

(Source: http://www.salliemae.com/) 

Therefore first one should be aware that student loans don't just disappear unless they are repaid. Fortunately the options are many. One is to stop attending due to a break in education or on graduation, to start a grace period. Six months follow before the estimated first payment is scheduled to start. In the grace period the interest rate is lower than during the repayment period. The grace period gives you a chance to find a job to begin payments for student loans.

Most students have more than one student loan, with usually one for each school year. If you qualify for subsidized student loans, the government pays the interest on the subsidized student loans. One could have half of his loans subsidized and the other half, not. Consolidating student loans can enable you to save yourself the efforts in separate payments for each loan and money as your loans are all combined into one. Consolidation during the grace period saves you substantial amount. For loans amounting to over $40,000, your payments can stretch to over 30 years.

Several other repayment options can be found by going to http://www.salliemae.com/. The best advice one can get is to research options thoroughly for the payment plan that would work best for you.

Selling Out Higher Education Policy With Student Loans Refinance

Few things can compare to continuing education. Those straight out of high school and those working for some time have obligations and bills to take care of, making it difficult to get funding for further education. Here, student loans can be a great help although Stafford student loans may prove confusing in terms of the process involved.

The first doubt for most is what Stafford student loans are all about and how they help students. It is a loan for students from Educaid. Wachovia Education Finance is a low interest government insured loan for undergraduate and graduate students. To avail student loans, the basic eligibility require a student to be enrolled at least halftime at an eligible school with satisfactory grades. One also needs to be a US citizen or a permanent resident of the US or eligible territory, be registered with the Selective Service for males age 18 to 25 and not be in default or due for refund on any Title IV loan or grant.

Next, choose between the two options in loans under Stafford student loans. Financial need determines subsidized loans. The government pays the interest on these student loans during the time the student is in school, six-month grace period following graduation and deferment period. Financial need is not considered for unsubsidized loans, with the student responsible for all interest charges until repayment. Either one or both loans can be qualified for.

The eligible loan amount differs based on the year in school and whether subsidized or unsubsidized. The current variable student loans are 2.77% before repayment and 3.37% during repayment. The interest rates are effective from 7/1/04 to 6/30/05, adjusted annually and never above 8.25%. Two deductions from the loan after disbursement are the 3% origination fee of the government and the 1% insurance premium by the guarantor.

Repayment starts after six months of graduation, withdrawal from school or drop below half time enrollment. Repayment terms are normally up to ten years with the minimum monthly payment not less than $50. Starting payment offers multiple options for student loans. In the standard repayment plan, the monthly payments are in fixed amounts. The graduated payment plan has small payments that gradually increase. In the income sensitive repayment plan, the amount depends on the student's annual income.

Rather challenging at first, getting a good start in the student loans scenario for further education whether just after high school or returning to school later in life, requires preparation. Student loans have a tradition of relatively low interest rates but what is not commonly known is that refinancing these loans can have advantages. When starting college no one hopes to require student loans. Availability of various assistance programs may reduce student loans to a last resort. When available scholarships are ideal as no repayment is involved.

Unfortunately they are not easy due to heavy competition and not all the costs of getting an education are covered. Grants also make great options being free money which requires no repayment as well. But even they can be difficult to get. Increased taxable income, despite the total being below average can be the basis for not qualifying for any more grants.

The university financial aid office explains that any increase in income from one year to the next can be taken to be the money needed for tuition. If possible live on the same amount as last year, using the increased income for college expenses.

Even with on-campus work experience programs offering financial aid, many still feel the need for student loans to cover the tuition for some part of college career. On the positive side the absence of loans to assist with college expenses could make many people unable to afford an education. The hope is that after graduation everyone will earn enough to be able to repay the loans.

Thus, student loans are best described as a necessary evil.

Student Loans: How to Get the Funding You Need

Many times student loans are key to whether a young adult will be able to attend college. Without them, getting a higher education may remain an unattainable dream. Luckily, many people can get a student loan without a co-signer and even if your are not financially needy.

The first step to getting a student loan is to know how to apply for one. The very first thing you need to do is fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA. You can do this at www.fafsa.ed.gov. This application will help qualify or disqualify you for a federal Pell grant, which needs to be done for all students -- whether they will qualify or not -- before looking for any other student loans. The great thing about the FAFSA is that, even if you don't qualify for a Pell grant, it can help you qualify for a subsidized Stafford student loan where the US Department of Education pays all of the interest on the loan until repayment begins (6 months after you have left school -- whether it is because you graduated or dropped out). 

What kind of loan or grant you get, and how much you are offered, will depend on your Expected Family Contribution -- otherwise known as EFC. If you can get a grant for some of your expenses, but not all of them, you will likely be able to obtain either a subsidized or unsubsidized student loan to pay for the rest. Even if you do not think that you will qualify for a grant or subsidized loan, you can still be offered one that is unsubsidized. This means that you will have to pay the interest from the start of the loan, but it may be easier to obtain a loan this way rather than by going to a private lender -- especially if you are a young student who does not yet have a credit rating and no other adult will co-sign for you.

Whether you get a grant, subsidized student loan, or an unsubsidized student loan, if you have money left over after all of your classes and books are paid for, you can use the remainder for living expenses. You can use it to pay the school for meals and a dorm for the year or to help pay for your own apartment and groceries. This may come in handy if you are not able to work enough hours while taking a heavy load of classes. 

If you cannot get any funding after review of your FAFSA, or you are not offered enough, you can always try to get student loan funding through a private lender. This may be harder to accomplish and you may need to line up a co-signer -- such as your parents, spouse, or an older sibling -- who has a good credit record. These student loans should also be deferred until you leave school and include a 6 month grace period.

Student Loans: A Debt That Can Haunt You

Student loans are one of the few types of credit that can haunt you almost forever. When it comes to taking out credit cards and loans, there are rules that all lenders must abide by, but many of these "normal" rules do NOT apply to student loan lenders. With most lenders they cannot legally sue you or take control of your assets (bank account, lien, etc) once the debt is past your state's statute of limitations (SOL). For some states this is as short as 3 years after the debt's date of first delinquency (the last "30+ days late" before the debt was charged off or sent to collections) and for others it can be as long as 15 years. Additionally, creditors are also not supposed to report the account on your credit report longer than 7 years after the debt's date of first delinquency. Now, the SOL on your debt will depend on your state's laws, but the 7 year reporting period is the same for everyone. With student loans, these protections are slim to none.

When to comes to student loans, you can be legally sued for the debt until it is paid. As a matter of fact, most of the time an actual court date and appearance are not even necessary. It is now more easy then ever for a student loan lender to gain access to your bank account without even notifying you first. Another possibility, and probably even more popular than grabbing funds from a bank account, is to have your paycheck garnished. This would happen in much the same way as it would for a child support debt or any other 'special debt'. This can be a surprising event when it happens, and can put you in a hard position when it comes to paying your other bills -- especially if you normally have little to no money left over after your usual bills are paid.

The best thing to do is to keep up on any student loans that you have. Student loans are structured to help the debtor out as much as possible. This is one reason why the laws are lenient when it comes to collecting these debts. First off, many lenders will only require you to pay $50 or so per month, especially if it is back by the Department of Education. Secondly, you can file for deferment if your situation qualifies for one. If you are now back in school, you can qualify for a deferment. If you are on public assistance, you can qualify for a deferment. You can check with your lender for a full list of deferment options that are available to you.

Lastly, if you are already in collections for your student loans, you may be able to 'rehab' them. This is a privilege that you have to specifically inquire about. No one will offer it to you and if you pay without looking into this option, you may be punished for it via your credit report. This is because, if you do rehab, the collection listing on your credit report will be removed once rehab is complete. If you pay without going through rehab, the collection listing will stay on your report for 7 years. Even if you cannot defer or rehab, taking care of your student loan debt as soon as possible is the best choice for any debtor.

Government Student Loans

It is important for students to remember while availing government student loans that they are financial obligations those need to be repaid. One has to pay attention to the various terms and conditions that are part of government student loans that help in funding one's school education. It is always better not to borrow more that what is required for repaying comfortably once the student were to complete schooling.

Most of the government student loans are interest free in the sense the student need not pay interest up to a certain period of time. Interest only begins to accrue only during the repayment period. There are other exceptions to this rule also. Repayment on government student loans may be sometimes deferred temporarily. This could happen in cases like if you were to join the army or return to your school half-time, or under certain stipulated circumstances. These loans are also beneficial in another sense since the students have often up to ten years to repay the loan. It would all depend on the total amount that they borrow in the first place. 

This flexibility when it comes to loan repayment is one of the reasons for the increasing popularity of federal student loans. There are different types of government student loans that are on offer. The Federal Perkins loan is one among them. This type of loan is available to both undergraduate and graduate students. Students are required to demonstrate a financial requirement in order to quality for these types of loans. The funds are actually disbursed by their respective schools and they must be in turn repaid to the school. This program is actually a school campus based program with the school being the lender, which is in turn using limited funds provided to it by the government.

There are also subsidized and unsubsidized loans available for students. In this case while the student is still in school the interest is taken care of the federal government which pays for it. Since this loan is purely on need based basis qualifying criteria is tougher and not all are likely to qualify for this type of government student loans.

There is yet another type of government student loan known as the 'Direct PLUS loan'. Under this type the loan is actually available either to the guardians or parents of undergraduate students. These loans can be availed if one were to demonstrate the financial requirement for such a loan. This type of loan actually comes with a variable interest rate.

One can find extensive information on student loans which are funded by the federal government by going through detailed online resources which are dedicated to the subject. You can also find detailed information regarding the qualifying criteria for availing these types of loans. Students can also get in touch with their school authorities to find out more in detail about these types of loans. Students can also find out more about student loans from their friends who may have availed these types of loans before them.

Bad Credit Student Loan

Bad credit student loans are available to anyone who cares to apply for them. You should not expect the bad credit student loan to fund your four-year study in an expensive school, because the financing available is quite limited. Another issue you have to consider is how the private credit institutions that offer these products don't always offer a loan repayment plan until after you graduate. 

These minor setbacks aside, bad credit student loan is probably the most viable way to finance further studies so you can have a chance to a more financially stable future.

Federal Student Loan

This type of loan is not based on your credit score. The good thing about a federal student loan is its need-based structure. Students with bad credit can get the necessary funds as long as they meet the requirements. Applicants with bad credit may not be able to get approval for federally subsidized private loans, since credit is a factor in the approval process for these loans. 

Private Funding 

Getting private funding for your student loans can be even more difficult because credit verifications are necessary. Usually, there are also credit limits to students who have a bad credit history. 

There are exceptions to this rule. For the most part, an average person doesn't get to access this type of loan. 

As long as there is a demand for a certain product as service, private funding will always find ways to meet this demand. This enabled bad credit student loan products to be introduced.

Student Loans

WASHINGTON — President Obama’s budget proposal on education would for the first time index student-aid Pell Grant to inflation, guaranteeing low-income college students a stable grant amount, and pay for that expensive shift by eliminating $4 billion in annual subsidies to private banks who make student loans

“The president has proposed the biggest change in the federal programs that help students finance a college education since the main higher education law was written in 1965,” said Terry Hartle, a vice president at the American Council on Education, which represents hundreds of colleges and universities.

Under the current system, college students in families with incomes low enough to qualify receive a Pell Grant, but the amount of the grant depends on how much Congress votes for the program, and in recent years that amount has not kept pace with inflation. The administration now proposes to guarantee not only that students will receive grants, but also that it will keep pace with inflation.

The current maximum grant is about $4,730, but beginning on July 1 that will rise to $5,350 as a result of the largest historical increase in the Pell program, already approved as part of the president’s economic stimulus bill. In 2010, the maximum grant is to rise to $5,550.

The budget blueprint also proposes sweeping changes in the way the federal government provides student loans. For nearly two decades, the government has run two parallel student loan programs, one based on subsidies to private lenders and another as a direct government lending program.

Under the Federal Family Education Loan Program, the government has paid a subsidy to banks and loan companies to make loans to students at a congressionally mandated interest rate. But during the turmoil in the financial markets last year, dozens of lenders withdrew from participation in the program, saying that they could not obtain capital at a cost that would make student lending profitable, forcing intervention by the Bush-era Department of Education to insure that student loans would continue to flow.

Education Secretary Arnie Duncan said on Thursday that the Family Education Loan Program program had for some time been “on life support.”

The Obama administration now proposes to eliminate it.

“That program has not only needlessly cost taxpayers billions of dollars, but has also subjected students to uncertainty because of turmoil in the financial markets,” the administration’s budget proposal says.

In its place, the administration seeks to originate all new loans through its direct lending program, first established in the Clinton adminstration.

Hundreds of private lenders currently receive subsidies under the Family Education Loan Program, and they will vehemently oppose these proposed changes. The largest of the private lenders is Sallie Mae, whose stocks plunged.after the plan was unveiled.

The case against student loan lenders

If a lender makes a loan and the borrower repays it with interest, the lender profits. If the borrower can't repay, the lender loses out. It's simple finance, or so you doubtless think. Silly you.

For the student loan industry, the reality is the opposite: Lenders hope their borrowers default, because they actually make more money that way. Not only can they charge usurious interest, but they also get to bury defaulted borrowers with punishing penalties and fees. Moreover, student loans are the only loans for which bankruptcy protection is prohibited. Pile on collection fees from agencies assigned to chase and harass borrowers for what they owe, and repayments can inflate to several times the original balance.

All of this comes from Alan Michael Collinge's necessary new exposé, and it calls to mind the Inquisition, minus the religion. That Collinge writes from personal experience makes "The Student Loan Scam" passionate and informed. When he graduated in 1988 with three engineering degrees from the University of California, he consolidated his $50,000 in student loans with Sallie Mae, the government-sponsored company that later privatized and is now the leading student loan company. When he fell slightly behind on his repayments, Collinge says, the company assured him that if he continued his regular payments, he'd be assessed only a one-time late fee.

That fee mushroomed into a monthly charge, however. When he called Sallie Mae, the company refused to strike the fees. He tried to consolidate his loans with another lender offering better terms, only to learn that federal law bans that after the first consolidation. Collinge, whose political action committee, StudentLoanJustice.Org, catalogs such cases and advises the victims, is not the most extreme example. Some folks have fled the country or committed suicide to escape the stress and collection efforts of the loan industry. Even an earthquake won't shake these guys, who, Collinge reports, defaulted one borrower (without notifying him) after a California quake destroyed his apartment.

This mess, according to Collinge, is the work not only of greedy industry types but also their lackeys in political office. "Know that I hold you in my trusted hands, I have enough rabbits up my sleeve to be able to get where we need to," Ohio Representative John Boehner told a dinner hosted by a Sallie Mae executive. There are several such quotes here, and in some cases here the industry's actions have drawn legal penalties. (Some, former industry insiders included, compare student lenders to loan sharks.)

Collinge calls for laws granting student borrowers the same consumer protections enjoyed by other indebted people. The book would have felt more balanced, without losing its muckraker's sting, had he provided more of the industry's defense. What little he serves up is pretty flabby. Stripping bankruptcy protections for student loans, he writes, was based on "undocumented anecdotal examples of students who filed for bankruptcy immediately upon graduation. In fact, most of the anecdotal incidents involved credit-card debt, not student loan debt."

Adding to the book is not a suggestion made lightly. For a slender volume, it reads long in places. The chapter on the grassroots rebellion against the loan industry, in large part a memoir of Collinge's activism, could go.

He's performed a service nonetheless. He notes that Thomas Jefferson and Henry Ford declared bankruptcy at various times in their lives - an important reminder, in our materialist, money-is-merit culture, that hard times can befall even the talented, and that bankruptcy shouldn't always be stigmatizing.

What’s in the New Student Loan Proposal

Higher-education experts say the Obama administration has proposed the broadest overhaul of federal college aid programs in decades. But for all the focus on the size of the budget, it has been hard to tell just what this means for students and their families.

One problem is that whatever the president proposes, Congress actually holds the purse strings. So there is no way to know just what aid will really be available down the road. But based on what administration officials have said, here is a summary of how the budget as proposed would affect funds available to help pay for college.

The first important thing to understand is that the proposed benefits will not be available until July 1, 2010 — more than a year from now.

Here are the major administration proposals:

PELL GRANTS In years past, the size of Pell grants, which go to the neediest students, depended on the budget in a particular year. The administration’s proposal would end that.

Also, beginning in the 2010-11 academic year, the maximum Pell grant would rise with inflation; the grant would be indexed to the Consumer Price Index plus 1 percent. Over all, the maximum Pell grant in 2010-11 would be $5,550, up from $4,731 in the current year (note that the size of the grant awarded to an individual student depends on that student’s financial circumstances).

More information about Pell grants is available on the Education Department’s Web site.

LENDERS Probably the most controversial part of the proposed budget involves an issue that most students do not care about: where their loans come from. The administration wants to get rid of the federally guaranteed student loan program, called the Federal Family Education Loan Program. Under that program, banks and other companies (like Sallie Mae) have provided loans to students for years at rates set by Congress. The loans are guaranteed by the government. (A list of the rates for the popular Stafford loans in the coming years is here.)

Under the Obama proposal, students would borrow directly from the government. Students could still borrow from banks, but the loans would not be guaranteed and the interest rate would not be set by the government.

LOAN AMOUNTS This is actually the more important question for students and families. The administration aims to provide borrowing options for students to make it easier to pay for college without turning to private lenders, primarily by expanding the Perkins loan program.

The administration wants to make the loans available at all colleges and universities in the country — more than 4,000 institutions, up from just 1,800 now. It also wants to sharply raise the total amount of money available, to $6 billion, from $1 billion a year.

In addition, the administration wants to increase the amount individual students can borrow through the Perkins program to match what is available through the Stafford loan program. The Stafford program provides up to a total of $31,000 ($5,500 a year in loans to first-year students, $6,500 to second-year students and $7,500 to upperclassmen).

Currently, undergraduate students can borrow up to $4,000 a year and up to $20,000 over all through Perkins. The bad news is that interest on Perkins loans would accrue while a student was in college. That is one of the ways that the government envisions paying for those Pell grant increases.

Perkins loans are available based on financial need, so you have to fill out the federal financial aid form, the Free Application for Federal Student Aid, or Fafsa, to get one.